ITR filing: Compare your tax outgo in old and new tax regime before finalising one for FY24

Jaipur-based marketing professional Vivek Jaiswal pays a low tax because his salary structure is fairly tax-friendly. However, he finds it difficult to pay his home loan EMI and invest in tax-saving options. TaxSpanner estimates that Jaiswal can have a surplus of almost Rs.60,000 if his salary is rejigged to include tax-free perks and if he opts for the new tax regime. Though his tax outgo will not change much under the new regime, he will not have to put away money in tax-saving options.

Jaiswal should start by choosing some tax-free allowances among the flexi benefits offered by his company. If he opts for gadget allowance of Rs.25,000 and food coupons worth Rs.24,600, his taxable income will come down by almost Rs.50,000. Under Section 17(2), gadgets and household appliances bought in the name of the company and given to the employee for personal use are taxed at only 10% of their value.

Three years ago, Jaiswal’s company rolled out the NPS benefit. Under Section 80CCD(2), up to 10% of the employee’s basic salary put in the pension scheme is tax-free. This deduction is available in the new tax regime as well. Jaiswal did not opt for the benefit because the contribution would have lowered his take-home salary. Under the new tax regime, he is not required to make tax-saving investments. He can consider stopping SIPs in ELSS funds and redirecting the money to the NPS.

Though the new tax regime does not offer deduction for life and health insurance premiums as well, Jaiswal should not discontinue these covers. The life insurance cover becomes even more critical because he has an outstanding home loan of almost Rs.28 lakh and is the sole earner in his family.

WRITE TO US FOR HELP
Paying too much tax? Write to us at etwealth@ timesgroup.com with ‘Optimise my tax’ as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments.